BACKGROUND
1. What is the relevant legislation containing the leniency policy and what is the enforcing body?
In Lithuania, the effective legislation in relation to leniency available to undertakings participating in the conclusion of anticompetitive agreements, is mainly contained in the provisions of Law on Competition of the Republic of Lithuania (the ‘Law on Competition’) adopted by the Parliament on 2 April 1999 with latest amendments dated 1 May 2004 (date of the entry of Lithuania into the European Union). However, the Resolution of the government of Lithuania ‘Regarding the rules for the determination of the amount of the fine imposed for the violation of the Law on Competition of the Republic of Lithuania’ (the ‘Rules’) adopted on the 10 December 2004, specifies the scope of leniency and certain additional requirements, elaborated below.
It might be of use to note that under the Law on Competition an undertaking (ie, a party to an anticompetitive agreement) has a broad meaning and includes any enterprise, combination of enterprises (associations, amalgamations, consortiums, etc), institution or organisation, or other legal or natural persons which perform or may perform economic activity in the Republic of Lithuania or whose actions affect or whose intentions, if realised, could affect economic activity in the Republic of Lithuania. It is also noteworthy, that even public administration and local authorities of the Republic of Lithuania shall be considered as undertakings, provided they are engaged in economic activities.
The Law on Competition also provides for the specific definition of anticompetitive agreement, covering any agreement (i) the object of which is the restriction of competition;
(ii) which restrict competition; or (iii) may restrict competition.
The conclusion of any such anticompetitive agreement is prohibited and shall be regarded as void from its conclusion. The Law on Competition also provides for the list of agreements, which may be qualified as anticompetitive agreements, namely: a) the agreements to directly or indirectly fix prices of certain goods or other conditions
of sale or purchase; b) the agreements to share the product market on a territorial basis, according to groups of buyers, suppliers or in any other way; c) the agreements to fix production or sale volumes for certain goods, as well as to restrict technical development or investment;
d) the agreements to apply dissimilar (discriminating) conditions to equivalent transactions with individual undertakings, thereby placing them at a competitive disadvantage; and
e) the agreements to make conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their commercial nature or according to usage, have no direct connection with the subject of the contract.
The conclusion by the competitors of anticompetitive agreements listed in points a-d above are prohibited per se. On the other hand, the type of agreements falling under clause e, may under certain circumstances be concluded between undertakings that, because of their minor influence on the market and, as a matter of law, are not regarded as restricting competition in the relevant market substantially. For instance, the undertakings involved in vertical arrangements are permitted to enter into such arrangements if their aggregate market share does not exceed 15 per cent of the relevant market. For undertakings having horizontal or mixed-type arrangements (ie, having features similar to horizontal and vertical arrangements) such arrangements may be entered into between undertakings provided their aggregate market share in the relevant market does not exceed ten per cent.
If the undertakings concerned enter into anticompetitive agreements in violation of the conditions elaborated above, they may be subjected to a fine ranging up to ten per cent of their aggregate annual income for the preceding financial year. The exact amount of the fine is usually determined after the conclusion of the investigation in relation to the anticompetitive agreement taking into account all the circumstances mitigating and aggravating the conduct of the undertakings involved.
Undertakings involved in an anticompetitive agreement may be exempted from the fine or subjected to a reduced fine, provided certain conditions listed below are met. Therefore, both options, namely (i) to receive full leniency and (ii) to receive partial leniency are available to the undertakings involved in an anticompetitive agreement.
It is also noteworthy, that according to the Law on Competition the undertakings that abuse the dominant position in the relevant market may also benefit from full leniency or partial leniency, provided certain conditions are fulfilled by them (ie, they provide information to the Competition Council, compensate the damages caused, etc).
According to the Law on Competition the primary body responsible for the enforcement of the Law on Competition and leniency policy is the Competition Council. However, its activities are subject to judicial review.
2. What are the basic tenets of a leniency/immunity programme?
The basic tenet of the Law on Competition and the Rules in regard to leniency lies in the right of undertakings involved in anticompetitive agreements to be exempted from the fine in full (full leniency) or in part (partial leniency), provided the degree of cooperation on the part of the undertaking with regard to the Competition Council is sufficient (for more details on the scope of leniency please see the answers to the questions 5 and 7 below).
3. How many cartels have been unveiled and punished since the adoption of the leniency policy?
Since the year of entry into force of the Law on Competition in 1999 the Competition Council has unveiled and punished around ten cartels.
4. What is needed to be a successful leniency applicant? Is documentary evidence required or is testimonial evidence sufficient?
In order to become a successful leniency applicant, the conditions under answers to questions 5 and 7 need to be fulfilled.
If any undertaking involved in an anticompetitive agreement decides to apply for full or partial leniency, it shall first submit an application to the Competition Council, in which, depending on the circumstances of each particular case, such applicant should explain the circumstances surrounding the conclusion/application of the anticompetitive agreement, provide evidence that substantiates the submissions of the applicant and fulfil other requirements set out in answers to questions 5 and 7.
Legislation does not specify what evidence (ie documentary or testimonial) in relation to anticompetitive agreements is admissible; however, Competition Council practice reveals that successful leniency applicants submitted written leniency applications first and thereafter accompanied them with oral submissions and/or written explanations. Therefore, it is likely that both types of evidence (ie documentary and testimonial) will be admissible. On the other hand, in order for the leniency applicant to have sufficient proof evidencing its cooperation with the Competition Council (ie, proof of it being ‘first in’ to cooperate), it is best arranged by submission of a written leniency application with pertinent information, documents and explanations attached to it.
Careful documentation of the leniency application process (ie, approaching the Competition Council with requests, lodging a leniency application, submitting additional information and explanations, participation in the meetings, etc) could also be of use if the decision of the Competition Council to grant/refuse to grant full or partial leniency to the applicant is challenged in a court of law.
TIMING
5. What are the benefits of being ‘first in’ to cooperate?
According to the Law on Competition, only the first leniency applicant may be exempted from the fine if: (i) it approaches the Competition Council before the adoption of the resolution to initiate the investigation regarding the alleged violation of rules prohibiting the conclusion of anticompetitive agreements; and (ii) all of the following conditions are fulfilled:
6. What are the consequences of being ‘second’? Is there an ‘immunity plus’ or ‘amnesty plus’ option?
Neither the Law on Competition nor the Rules contain specific clauses for a second leniency applicant. They provide for the general legal regime applied to all those leniency applicants who cooperate with the Competition Council, but are not the ‘first in’ to cooperate (for more details in relation to this regime see the answer to question 7 below).
It is also noteworthy, that neither the Law on Competition nor the Rules provide for the right of the second leniency applicant to receive full leniency.
7. Are subsequent firms given any beneficial treatment if they make a useful contribution? How are ‘useful contributions’ defined?
The Rules provide that all undertakings applying for leniency after the first leniency applicant are subject to the same legal regime, namely, they are entitled to a reduction of fine from 20 to 50 per cent, provided they furnish to the Competition Council evidence in relation to anticompetitive agreements that the Competition Council is not in possession of. This kind of contribution to the investigation could be regarded as ‘useful’.
SCOPE/FULL LENIENCY
8. Is it possible to receive full leniency? And, if so, what are the conditions required to receive full leniency?
As noted above, only the undertaking which is the first in to cooperate with the Competition Council, shall be entitled to receive full leniency, provided the conditions contained in the first part of the answer to question 5 are fulfilled.
9. How many companies have received full immunity from fines to date?
According to our knowledge, there are no undertakings that have benefitted from full leniency. However, in two cases heard by the Competition Council two undertakings that had participated in the conclusion of anticompetitive agreements were granted partial leniency for their contribution to the investigation.
PROCEDURE/CONFIDENTIALITY
10. What are the practical steps required to apply for leniency?
Neither the Law on Competition nor the Rules provide for any specific leniency application requirements nor there is any other law giving specific guidelines. However, according to the working regulations of the Competition Council, approved on 14 November 2002, all the correspondence, except emails, shall be registered with the secretary of the administration of the Competition Council. Therefore, in applying for leniency, the common sense advice would be to use fax or paper correspondence, provided it contains sufficiently precise information in relation to the leniency applicant and a sufficient description of factual information.
The application for leniency should contain information on the identity of the applicant and should be duly signed and sealed by the authorised representatives of the applicant.
If the leniency application is delivered in person, it is also useful to request the secretary of the administration of the Competition Council to confirm the receipt of such application.
As noted above (see answers to question 4), careful recording of the leniency application procedure may also be useful for the leniency applicant.
11. Is there an optimal time to approach the regulatory authority?
As a matter of law, the optimal time for approaching the Competition Council with a leniency application is before adoption of the resolution by the Council to initiate their investigation. At this stage the leniency applicant may expect to receive full leniency.
If, however, the resolution to initiate the investigation is already adopted by the Competition Council and the undertaking involved in the anticompetitive agreement decides to lodge a leniency application, the application should be drafted and provided to the Competition Council as soon as possible in order to qualify as the first in to cooperate and receive the benefits of such cooperation. (For more details see answers to question 5.)
Even if the resolution to initiate the investigation has already been adopted by the Competition Council and the undertaking is aware that the Competition Council has already been approached by other undertakings, it is still worthwhile approaching it and providing it with evidence and other information in relation to the anticompetitive agreement, as this may still qualify as mitigating circumstances that may lead to the reduction of a fine (for more details see answer to question 7).
Bearing in mind the above, it shall be up to the undertaking involved in the conclusion of an anticompetitive agreement to evaluate the benefits it might enjoy in the light of cooperation with the Competition Council compared to the harm that it may suffer if the Competition Council does not benefit from the cooperation of such undertaking.
12. What guarantees of leniency exist if a party cooperates?
If the leniency applicant cooperates with the Competition Council and fulfils the requirements indicated in the Law on Competition and the Rules, it may expect to receive full or partial leniency.
The extent of leniency is determined by the Competition Council, which shall follow the requirements of the Law on Competition, Rules and general principles applicable in determining the exact amount of the fine imposed (see answers to questions 5 and 7 above).
13. Is confidentiality afforded to the leniency applicant and other cooperating parties? If so, to what extent?
There are no specific regulations in relation to the confidentiality to be afforded to the leniency applicant and other cooperating parties in leniency applications.
The working regulations of the Competition Council, however, provide that private, professional, commercial or bank secrets containing information may be refused publicity upon the request of the interested persons. In such a case, the interested persons shall provide the Competition Council with an application in relation to the specific information, which shall not be disclosed, and the official from the Competition Council shall adopt the decision in relation to such a request. It would be reasonable to believe that leniency applicants could also benefit from such a confidentiality privilege.
However, it is our belief that the identity of leniency applicants ultimately cannot remain undisclosed. According to the working regulations of the Competition Council, the parties to the case concerning the anticompetitive agreement shall be provided with the decision of the Competition Council. The decision shall indicate the sanctions for the participants of the anticompetitive agreement; therefore, it is likely that the identity of the undertakings involved in the anticompetitive agreement, including leniency applicants cooperating with the Competition Council, shall be disclosed. This conclusion is also confirmed by current case law of the Competition Council.
CONSEQUENCES
14. What effects does leniency granted to a corporate defendant have on the defendant’s employees?
Leniency granted to a corporate defendant does not impact the legal position of the defendant’s employees (ie the employees of the defendant do not face any direct administrative, criminal or civil sanctions).
However, the employees of the corporate defendant may be subjected to an administrative fine from LTL 500 to LTL 2,000 for their failure to provide documents; failure to appear and provide information upon the request of the officials of the Competition Council; failure to allow entry or creation of obstacles for the officials of the Competition Council in investigating the companies, entities, organisations and other undertakings; hiding of documents or submission of false information; or failure to provide such information to the Competition Council.
The repeated commitment of the same offence by the same person within one year from the expiry of the prescribed sanction subjects such a person to a fine from LTL 2,000 to 5,000.
15. Does leniency bar further criminal or private enforcement?
The laws of the Republic of Lithuania do not criminalise the conclusion or implementation of anticompetitive agreements as such. The fines imposed for the conclusion of anticompetitive agreements are administrative in their nature.
As regards private enforcement, the Law on Competition provides that undertakings who violate the Law on Competition shall compensate the damages caused to other undertakings, natural and legal persons, according to the procedure established in the laws of the Republic of Lithuania.
If the Competition Council finds that by virtue of the conclusion of the anticompetitive agreement the undertakings have violated the Law on Competition, the provisions of the Civil Code of the Republic of Lithuania (the ‘Civil Code’) on civil liability shall be applied.
According to the Civil Code the following elements shall be established in order for the person to incur civil liability:
If it is determined that the provisions of the Law on Competition forbidding the conclusion of anticompetitive agreements were violated, the persons that have sustained damage in the aftermath of such violation have a right to claim damages from undertakings involved in the the anticompetitive agreement. However, the elements of civil liability should be proved in a court of law.
RELATIONSHIP WITH THE EUROPEAN COMMISSION’S LENIENCY NOTICE AND LENIENCY POLICY IN OTHER EU MEMBER STATES
16. Does the policy address the interaction with applications under the Commission Leniency Notice? If so, how?
The law of the Republic of Lithuania does not provide for any legal links between the law of the Republic of Lithuania on the one hand, and the Commission Leniency Notice, on the other.
17. Does the policy address the interaction with applications for leniency in other EU member states? If so, how?
To the best of our knowledge, the law of the Republic of Lithuania does not specifically address the question of interaction between the applications for leniency in other EU member states.
REFORM/LATEST DEVELOPMENTS
18. Is there a reform underway to revisit the leniency policy? What are the latest developments?
Currently there are no reforms underway to revisit the existing leniency rules, however, as the officials of the Competition Council informed us, it is likely that leniency guidelines will be adopted in the future in order to encourage undertakings to apply for leniency.
